Nepal Stock Exchange opening its trading from today, In which direction will NEPSE index move now?

NEPSE (Nepal Stock Exchange), the only secondary market of Nepal is going to open its trading floor from 30^th of Baishak, 2077 after being closed for 50 odd days. As the market is going to open all the investors are worried about the future direction of the stock market. Here below is my opinion how the market will fare in the coming days based on my short experience of five years and my knowledge about the stock market.

1. NEPSE is in a bear cycle since a couple of years and looking at the history of NEPSE the bear cycle is about to complete its tenure and a bull cycle is about to start.
2. Stock market was closed for more around fifty days and all the investors got time to study and enhance their knowledge about the market, the investors being aware and educated is a positive aspect for the market.
3. During the time of crisis such as the earthquake and also during the economic blockade NEPSE fared well and was on a positive side.
4. The investment opportunity in the existing businesses in Nepal will be limited and share market will be a lucrative place to invest as share market is a place where you can start to invest in a single day (or two if you already do not have a dmat and a trading account) and cash your investment in less than a week. There is almost no entry and exit barrier.
5. The banks interest rate in deposit is already down and the loans rate will also be down, there are further talks of reducing the interest rate as the there is no problem of liquidity and places to disburse loans are limited.
6. Recent directives from SEBON will help in market improvement and attract investors to take online user id.
7. SEBON has given many suggestions for the upcoming fiscal budget one of which is the difference in CGT for short term and long term investment.
8. Dual tax on cash and bonus dividend might be addressed in the upcoming fiscal budget.
9. The recently introduced ‘Book Building’ system will attract established and huge profit making companies to go public (issue IPOs).
10. As the Banks also do not have new areas for loan disbursement, they might focus on increasing their loan portfolio on loan against shares.
11. The various and important points of the 58 points suggestion that are not implemented yet will be implemented sooner or later.
12. Before the trading was closed NEPSE index already saw a free fall from 1632 to 1251 (fall of about 25%) in a very short span of time so we can say that the point of the downtrend because of the fear of corona is almost achieved by NEPSE. It might see a downside for a few days but will surely bounce back as the global stock indices also started to bounce back after a fall of approximately 30-35% on an average.

We can be hopeful see other improvements in the technological and legal aspects in near future which will help in making NEPSE strong, stable and advance. On the basis of these past trends, recent activities and hope of improvements in policies in future we can be sure that the bull run in NEPSE will start soon and it will create a new high (all time).

I being an optimistic person am sure that the future of NEPSE is very bright in  the long run, this is also a great time for new investors to enter the market as a long term investor. But before entering the market or increasing current investment one must study and research well, do the due diligence, know one’s risk bearing capacity.

Disclaimer: This article is only my opinion and not an investment advice, so DO NOT make your investment decisions on the basis of this article. Be cautious before investing money in the stock market as it is you who will have to bear the consequences (both profit and loss) of your investment.

Rojin Joshi, an avid and optimistic investor